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The Cognitive Cost of Poverty
An anonymous reader writes "It's a common trope that most poor people are poor because they're lazy or just inherently bad with money. But a new study (abstract) makes a fascinating find: being poor actually reduces your cognitive capabilities when thinking about money. 'In a series of experiments run by researchers at Princeton, Harvard, and the University of Warwick, low-income people who were primed to think about financial problems performed poorly on a series of cognition tests, saddled with a mental load that was the equivalent of losing an entire night's sleep. Put another way, the condition of poverty imposed a mental burden akin to losing 13 IQ points, or comparable to the cognitive difference that's been observed between chronic alcoholics and normal adults.' This makes the difficulty in climbing out of poverty much easier to understand. The researchers also demonstrated causality by showing that thinking about a very small expense led to no impairment, while thinking about a very large expense did. They confirmed this by looking at a group of farmers in India who tend to receive most of their income at one time — immediately following their harvest. Shortly before that payment, when the farmers had very little money, their scores dropped as well."
I have seen plenty of rich people who were also pretty bad with money.
Rich people that inherit their money often manage it poorly. There is an old saying: The first generation earns a fortune, the second generation sits on it, the third generations squanders it. But rich people that got there on their own are pretty much by definition good with money.
My experience with poor people is that they don't see the connection between large and small amounts of money. They see the money they spend on a soda, and the money they need to send their kid to college as completely unrelated. They are unable to comprehend that by drinking water instead of three sodas a day, and putting the savings into a tax deferred education savings account, they can easily afford in-state tuition at a good university.
when you are living on the bread line, you tend to have a more short term attitude to things. So if they get a bit more money than usual, they will enjoy it quickly as a treat against all the other times where they are having a hard time
"The hands that help are better far than lips that pray." - Robert Ingersoll (1833-1899)
Not really, if you've met both people who've inherited wealth and made it themselves, the difference is striking.
I don't rag on them for being poor, but I know why they are and I know that they are also undeserving of handouts.
So you just don't tell them you hate them to their face. How noble of you.
They all seem to have a few things in common though: They have little incentive to pull in an income, and/or they really don't understand the concept of investment.
I don't know if you're aware of this, but public education was an idea that came from the working class. It was fought by the elite class for decades, despite popular support. Labor unions repeatedly shutting down factories and killing profits was what eventually created the federal mandate that public education be available in all states. After that, it was a fight to get blacks and minorities into schools, necessitating the national guard coming out to forcibly open the doors of schools in the South and allow them in. And now, higher education is being rapidly priced into extinction, and it is disproportionately affecting the working class.
So when you say "they don't really understand", consider the possibility that it's not because they can't understand, but lack access to resources that would allow them to.
One thing is clear though: Handing money to poor people isn't the answer. It never will be.
But handing money to CEOs "too big to fail" and banks so corrupt they put the entire economy in the drink for over a decade is? Why do you feel that it is more likely that hundreds of millions of Americans are lazy than that a few thousand of them are greedy?
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